Amendment in Sec.76

[Admin TMI]

Question - what are amendment proposed in Sec.76 in Finance Bill 2015 ?

[Admin TMI]

Section 76 is being amended to rationalize penalty, in cases not involving fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of service tax, in the following manner,-

(i) penalty not to exceed ten per cent of service tax amount involved in such cases;

(ii) no penalty is to be paid if service tax and interest is paid within 30 days of issuance of notice under section 73 (1);

(iii) a reduced penalty equal to 25% of the penalty imposed by the Central Excise officer by way of an order is to be paid if the service tax, interest and reduced penalty is paid within 30 days of such order; and

(iv) if the service tax amount gets reduced in any appellate proceeding, then penalty amount shall also stand modified accordingly, and benefit of reduced penalty ( 25% of penalty imposed) shall be admissible if service tax, interest and reduced penalty is paid within 30 days of such appellate order.

AI Summary

Penalty rationalization: caps and time bound waivers for service tax defaults to incentivise prompt payment and reduced penalties.
Amendment to Section 76 caps penalties for non fraudulent service tax defaults, grants a full penalty waiver if service tax and interest are paid within a short compliance period after notice, allows a reduced penalty where tax, interest and reduced penalty are paid within a short period after the assessing officer's order, and mandates penalty adjustment where tax is reduced on appeal with the reduced penalty benefit available upon timely payment after the appellate order.